Hostess standoff follows familiar script

By Maria Panaritis, Inquirer Columnist

When bankrupt Hostess Brands Inc. declared it would end its bakery business and potentially incinerate thousands of jobs with a liquidation move, I had the sense I had seen this movie already.

Just two days before Friday's announcement, which set off Twinkie nostalgia while torching a nationwide strike by Hostess' unionized bakers, I had written a small blurb about another company that had faced precarious talks in Chapter 11 bankruptcy with its unions:

The final three Super Fresh stores in the South Jersey suburbs of Philadelphia are being shut down by corporate parent Great Atlantic & Pacific Tea Co., according to the union representing 155 clerks who will lose their jobs.

Supermarkets in Marlton, Westmont and Plainsboro will be shuttered in about two months ... the company had initially planned to close only Marlton, but later concluded that costs associated with keeping the other two stores open were too high. ...

Seniority provisions that packed those three stores with veteran clerks as other stores shut down had, ultimately, contributed to the demise of those very stores. And this was after the unions at Super Fresh and sister chain Pathmark had agreed to $625 million in givebacks to A&P.

Like Hostess on Friday, A&P had pressed for concessions from a union, the United Food and Commercial Workers, during its 2011 bankruptcy, saying that without steep cuts to wages and benefits the chain would sell itself off. Bye-bye, labor contracts, under that scenario.

"We got shocked when they said they were closing all three," Sam Ferraino, president of UFCW Local 1360, said of the latest announcement that stores would be shuttered.

A damned-if-you-do, damned-if-you-don't dynamic faces unions whose employers are no longer rolling in dough. The Hostess face-off simply captured that in dramatic fashion.

The International Brotherhood of Teamsters accepted Hostess' proposed steep wage and benefits cuts; the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on strike at 12:01 a.m. Nov. 10.

Management's response Friday: It would fire all 18,500 workers and liquidate its assets rather than grapple with labor contracts it no longer wanted to honor.

The stakes have been high for union workers at plenty of places over the last couple of years: Hostess. Pathmark. Super Fresh. Acme Markets owner Supervalu Inc.

Before they were larded down with tons of debt through merger-and-acquisition frenzies, these brands and their parent companies projected power and produced steady wages for American retail workers.

They commanded their markets, as anyone with a TV in the '70s and '80s recalls. Acme, Ding Dong, and Wonder Bread ads were ubiquitous. So was customer cash.

But times changed. And so did the market.

In the grocery realm, the emergence of Wegmans, Walmart, Trader Joe's, Whole Foods, and even Dollar General has gnawed at old players like Acme and Super Fresh. The new guys offer lower prices through nonunion labor, debut newer stores, or push newer approaches to selling groceries.

The Acmes and Pathmarks of the world have watched their sales plummet. Their corporate owners and shareholders have responded by attacking labor contracts.

Supervalu, while not in bankruptcy, has been battered by newer competitors and high debt, and is now seeking a buyer. (Hostess, too, carried huge debt amid weak sales.)

Supervalu's unions are nervously waiting to see what comes of that search. If Acme Markets were to be sold, they wonder, would a new buyer honor union contracts?

Union and Hostess officials agreed Monday to consider a bankruptcy judge's request that they enter mediation as a last-ditch effort to avoid liquidation.

The Wall Street Journal reported that the bakers' union was hopeful that a buyer of one or more of the company's famous brands might preserve some jobs. Beyond such wishful thinking, however, a bigger question loomed:

What, if anything, can really be done once a unionized powerhouse sheds its riches and is mismanaged into near-oblivion?

A thick plot, for sure. A happy ending? Don't toss the Kleenex just yet.